Monday, November 24, 2014

Boeing announced the start of final assembly on the first 787-9 to be built at their North Charleston facility and which will ultimately be delivered to United Airlines in about 3 months time. The aircraft, ZB170 (LN270, N35953) was loaded into position 1A on November 23rd according to my sources.

Boeing is aggressively expanding its footprint in the North Charleston area and plans to build all three version of the 787 at the plant.

Here is Boeing's press release on the start of final assembly of ZB170.

Boeing South Carolina Begins Final Assembly of its First 787-9 Dreamliner

North Charleston site joins Everett, Wash., team in building newest 787

NORTH CHARLESTON, S.C., Nov. 24, 2014 /PRNewswire/ -- Boeing (NYSE: BA) has started final assembly of the 787-9 Dreamliner at its South Carolina facility. The team began joining large fuselage sections of the newest 787 Nov. 22 on schedule, a proud milestone for the South Carolina team and another sign of stability for the program.

The North Charleston, S.C., site joins Boeing's Everett, Wash., final assembly, which began 787-9 production in May 2013. United Airlines will take delivery of the first South Carolina-built 787-9.

"Our team is well prepared and eager to assemble the 787-9 Dreamliner," said Jack Jones, vice president and general manager of Boeing South Carolina. "Achieving this significant milestone in our final assembly operations demonstrates that we're performing well here at Boeing South Carolina. We're looking forward to delivering our first South Carolina-built 787-9 to United Airlines, and delivering 787-9s as well as 787-8s to all our customers."

The 787-9 complements and extends the 787 family, offering airlines the ability to grow routes opened with the 787-8. With the fuselage stretched by 20 feet (6 meters), the 787-9 can fly up to 40 more passengers an additional 450 nautical miles (830 kilometers) with the same exceptional environmental performance – 20 percent less fuel use and 20 percent fewer emissions than the airplanes it replaces. The 787-9 leverages the visionary design of the 787-8, offering passenger-pleasing features such as large, dimmable windows, large stow bins, modern LED lighting, higher humidity, a lower cabin altitude, cleaner air and a smoother ride.

Thursday, November 20, 2014

Since Boeing's 787 plant in North Charleston opened in 2011 it has exclusively built the 787-8. This Sunday (Nov. 23rd) that will change when ZB170 (LN 269, N35953) is loaded into position 1A at the North Charleston plant to start the final assembly process. The aircraft is destined for United Airlines and should be delivered sometime in March.

This is a huge milestone as the future of the 787 seems to be tied to the 787-9 and, to certain extent, the 787-10. As the production rate increases in North Charleston there should be more 787-9s being built in North Charleston but for the first year or so most of the 787s that are built in Boeing North Charleston will be the 787-8. In 2015 I expect the lion share of 787-9 that are delivered will be built in Everett.

Leeham Co. analyst Scott Hamilton broke the news last night that Delta Airlines has decided to go with Airbus' offer of the A350-900 and A330-900 aircraft essentially rejecting Boeing's offer of the 787. The rumor, right now, is that Airbus offered favorable delivery slots in 2017 while Boeing's delivery book for that year is completely sold out.

Interestingly Delta had inherited Northwest Airlines' 787 order when they merged in 2009. At that point the Delta had the early delivery slots for the 787s yet over time they had elected to move those delivery slots further out to the right to around 2020 and beyond. If they had kept those delivery slots for the 2017-2018 time frame, Delta could have had the 787-9 and at a very competitive price as well. One has to question Delta's fleet management decisions in context of the Airbus order while still holding a 787 order with early delivery slots.

Now that they have gone with Airbus the 787 order is in limbo and, in my opinion, order that will never be delivered even though it will remain on the Boeing order book just like Virgin Atlantic's A380 order with Airbus.

Saturday, November 15, 2014

With November more than half over Boeing has recorded only 1 delivery of a 787 this month but more troubling is the continuous shifting of the delivery schedule to the right setting up what may be a very un-happy holiday season for the Boeing workers who would have to put in overtime to get these aircraft completed, tested and delivered.

Boeing can deliver 8 more aircraft this month but one of them, a 787-9 for Air New Zealand, hasn't had its first flight yet and is tentatively scheduled to be delivered around Nov. 24th. It appears that this aircraft may fall into the December delivery time frame thus I see Boeing only delivering only a total of 8 787s this month.

Notably there are 4 787s for Avianca all of who are ready for delivery or are close to being ready for delivery but these deliveries are now not scheduled to start until December due to some unspecified issue. Rumor has it that the 1st class seats are not FAA certified though I doubt that as all the customer supplied options such as seats come from the Boeing catalog which are FAA certified.

Also many of the 787s have yet to take their first customer flights and that schedule is also slipping to the right.

This can leave a large number of 787s hanging around Everett (not so much Charleston due to the low production output) as the Holidays come up. This can serve to continue to increase Boeing's deferred production costs well past the $25.2bn mark as Boeing will have to pay a tremendous amount of over time to catch up in December. If Boeing only delivers 8 total 787s in November, their YTD total would be 98 and 12 short of their goal of 110. It is certainly possible for them to deliver 12 787s in one month; they demonstrated they can deliver a significant number of 787s in 1 month but it will come at a cost.

Additionally, they have undertaken very few B-1 flights for aircraft that are due to be delivered in December and there a re still a number of 787s that are at the EMC or on the 40-51 ramp that are finishing up traveled work.

All the while production continues at the 10/month pace though with continued traveled work issues. Thus far they've rolled out 4 787s with a 5th due to roll out on Sunday night and they've started final assembly on 5 other air frames. Clearly the backlog in increasing so much that Boeing will be sending 787s to Charleston for final delivery as the ramp space at Everett is shrinking.

It is plainly obvious that Boeing production issues on the 787 are far from over and I do think the only way for them to be resolved is to through more resources and money now before the issues continue to snowball.

We'll see for December brings but right now I think it's safe to say that Boeing 787 deliveries for this month will be terrible at best.